The Cost of the Civil Justice System

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CHAPTER 11

11.1 Cost and Value of Justice

Justice is such a fine thing that we cannot pay too dearly for
it.

—Alain Rene Lesage

The civil justice system costs money.

The "cost" of civil justice accordingly has different faces.
Government — and therefore the public in its taxpaying
capacity — shoulders a major portion of the cost.
Litigants, who are at the same time taxpayers, also shoulder an
additional cost of the civil justice system. There are
institutional or systemic costs on the one hand and user costs in
the form of legal fees and administration, on the other hand.

How does one go about assessing these various costs and their
impact in order to determine what value the public and litigants
are receiving for their money? Are these costs in keeping with an
effective, efficient and accessible civil justice system?

These questions are very difficult to answer, partly because
very little study has previously been given to them. Having some
concept or definition of what the true value of civil justice is
to the province and its citizens in this sense, however, could be
a useful guide to any assessment of the degree to which that
value is actually achieved. No such concept or definition exists
at the present time, as far as we have been able to
determine.

We do not refer to value in this context in the sense of the
qualities of worthiness of the system, but rather in the sense of
what might be described in an investment analogy as a return on
one's money. Are the public and litigants getting the best return
on their investment and expenditure on civil justice? In our
consultations with the public the overwhelming answer to that
quest ion was "No". To a lesser extent, the Bar expressed a
similar sentiment.

One can catalogue the obvious reasons easily. Most litigants
simply want to have their disputes resolved quickly and cheaply,
and to move on with their lives. Delays in proceedings are
legion, however, and their associated costs enormous. Cost and
delay are the twin enemies of the civil justice system.

Perceptions

From wasteful motions through endless discovery to long
waiting for pre-trials, trials and appeals, the public perceives
the civil justice system to be out of control. Lawyers, too, are
frustrated by these impediments. Lawyers are stuck in courtrooms
for hours waiting to be heard, forced to charge their clients for
at least some of that time, and can only blame the system.
Litigants expect to pay something for what happens in court, win
or lose. What they learn, however -- if our public consultations
are any indication -- is that once they have become enmeshed in
the system their destiny is out of control. Too late to get out,
they discover that they simply cannot afford the game. They are
not only paying to win or lose, they are also paying to wait.

In addition, the public believes that lawyers have an
incentive to waste time and effort. The "billable hour", which is
the most common basis upon which legal fees are calculated these
days, is seen to encourage lengthy proceedings and the
inefficient handling of cases. Even a poor job extracts a payment
for hours of work at a seemingly exorbitant hourly rate. An
advantageous settlement or a successful trial may attract a
premium over and above the hourly rate, and although the premium
may be justified in the eyes of the lawyer and often by objective
standards, the reasons for it may never be properly explained to
or understood by the client. As a result, the stereotype of the
rapacious lawyer continues to be fed.

The following is a summary of the issues identified by the
public during our consultations regarding costs:

affordability

waste

unnecessary complexity

unnecessary delays

belief that the billable hour approach to fees for service
drives costs up, and an apparent lack of alternatives to this
approach (should contingency fees be reconsidered?)

lack of accountability with respect to the management of
the system

lack of service values

lack of fairness with respect to access in the sense that
middle class people are often excluded by the cost because they
are neither eligible for legal aid nor wealthy enough to be
able to carry the lawsuit themselves

Legal Aid itself, and its impact upon the conduct of
litigation

unpredictability

lack of cost sanctions for abuse or misuse of the
system

lack of incentives to settle

lack of sensitivity or concern about what it costs people
to engage in a lawsuit

the cost of court proceedings in family matters
exacerbating family problems

lack of control anywhere on costs

Many of these concerns mirror those expressed by respondents
in a study conducted by Professors W.A. Bogart and Neil Vidmar in
the late 1980's [16] .
Relying upon a survey conducted in Montreal, Toronto and Winnipeg
by the Legal Research Institute of the Manitoba Faculty of Law
[17] , this study reported
[18] ,

that "a majority of repondents indicated that something
needs to be done to improve the way the legal system operates,
and that the legal system favours the rich and powerful"

that a majority of respondents thought "that it takes too
long to get anything done through the legal process"

that 44% agreed strongly and 28% somewhat that they
"probably wouldn't bother disputing most legal problems because
the cost of doing so would be too high"

The same study also reported that 89% of respondents agreed
strongly (64%) or somewhat (25%) that "Canada must maintain a
good and fair justice system, regardless of the costs". At the
same time, 69% agreed strongly (34%) or somewhat (35%) that
"Compared to other ways the government spends money, the justice
system is a good use of taxpayers' dollars [19] .

Moreover, with respect to the notion of the stereotypical
lawyer, Bogart and Vidmar discovered that [20] :

"On the whole, people spoke positively of their experience with
specific lawyers. Whatever people may think of lawyers in the
abstract, many are willing to speak positively, even at times
glowingly, about how a lawyer has represented their interests."

With these varying and conflicting views as backdrop, then,
how does one assess the reasonable and acceptable "cost" of civil
justice? As Bertolt Brecht put it [21] :

You want justice, but do you want to pay for it? When you go to
a butcher you know you have to pay, but you people go to a
judge as if you were off to a funeral supper.

11.2 Factors Driving Up Costs

Many of the factors driving up the cost of justice are the
subject of much of this Report. Some are identified, in summary
fashion, below for purposes of this Chapter:

the adversarial premise of the system, particularly in
Family Law matters

backlog, delays

structure - there is no overriding capacity to manage or
control costs; parts of the system work independently rather
than interdependently

bureaucracy - its size and centralized decision-making
nature mitigate against cost effectiveness fees for service, in
particular "the billable hour"

legislation without impact studies

the increasing litigiousness of our society

voluminous and sometimes unnecessary paper, and the
handling and storage costs associated with them

administration fees which do not seem to bear any relation
to the cost of providing the service e.g. estate fees

lack of principles or standards with respect to fees

the increasing complexity and length of litigation

the increasing need for resort to "experts" of almost every
kind, and the significant cost associated with such
consultations (custody and access assessments, medical reports,
forensic accounting reports, real estate and appraisal reports,
technology reports -- the list is virtually endless)

lack of disincentives in the form of sanctions for
unnecessarily protracted processes

the open-endedness of Legal Aid certificates

Legal Aid was identified by the Public, the Bar and the
Judiciary as a matter with significant bearing on the cost of the
civil justice system. Respondents felt that it encourages
unnecessary litigation because it provides few incentives to
settle and fewer to be efficient.

This led to another issue involving access to justice. It is
important to ensure that access to justice applies fairly to all
members of society. There is a particular concern that the middle
class, who do not qualify for Legal Aid, cannot afford the costs
of litigation and therefore encounter a barrier to access to
justice. As well, wealthier members of society can wear down
middle-class members since the latter cannot afford to fund
lengthier lawsuits.

At the same time, however, the existence of a viable Legal Aid
plan is critical to enable low or non-income members of our
society to have access to the civil justice system. The cost of
Legal Aid, and its impact upon the way in which the system
functions, must be balanced against this need.

The cost of Legal Aid, which is funded primarily by the
government and, therefore, by the taxpayer, has been steadily and
dramatically increasing in recent years. This cannnot be ignored
as a factor contributing to the increases in cost of the civil
justice system as a whole.

The Civil Justice Review recognizes that Legal Aid is a major,
and contentious, issue in society today. Others are examining the
implications of this debate. We have not endeavoured to duplicate
their efforts.

There are two major issues which need to be addressed, in our
opinion, however, as we examine the legal aid question. The first
is that the Legal Aid system needs to be reviewed, to see if it
still works and if it truly does provide the means for low or
non-income members of society to enjoy access to justice. The
second is to determine the extent to which the public interest
calls for the use of Legal Aid to finance private disputes in the
courts or through ADR.

A major examination of the Legal Aid system is currently
underway by other bodies. We hope to draw upon the results of
that examination in making recommendations respecting Legal Aid
in our Final Report.

11.3 Available Data on the Cost of Justice, and its
Limitations

Without question, the study of what it costs from a public
perspective to provide a civil justice system, and of what it
costs from an individual perspective to use that system, is an
important issue.

On such an important issue, one would expect to finds a wealth
of research. Surprisingly, there is little analysis or hard data
available. This is true not only for Ontario but for most
jurisdictions around the world.

The only report we found which warrants the title "study" is
one entitled "The Costs of the Civil Justice System", written in
1982 by the American Institute for Civil Justice [22] . This study explored the costs
of specific types of civil cases in four jurisdictions in the
United States. The authors' introductory comments are most apt,
however. They said:

As with many other long-standing controversies about the civil
justice system, however, neither critics nor defendants have much
solid evidence to support their views about overall system costs.
Anecdotes abound, of course. Each commentator can cite a few
instances within his or her own experience, but no impartial
institution has undertaken the laborious task of collecting,
standardizing and comparing available cost and workload data to
evolve overall estimates with some claim to statistical
validity.

The Civil Justice Review has faced similar difficulties. We
have reviewed the following sources of data: The Public Accounts
of Ontario for 1993-94, the Ministry of the Attorney General
Annual Statistical Report 1993-94, and available statistics from
the Courts Administration Division of the Ministry of the
Attorney General. There are significant limitations in the data
available for analysis. Consequently, there are significant
limitations on what we have been able to determine, in concrete
terms, about the "cost" of justice in Ontario.

In the first place, there are not many reliable statistics
available. With the advent of new technologies, better data
gathering techniques and statistics are being generated. However,
the statistics-creating process is far from perfected.

Secondly, the process of analyzing statistics involves months
of work. It also requires the participation of many people, some
of whom are part of the government and some of whom are outside
of government. These people have to go beyond the statistics to
discover information which will allow them to complete an
analysis. For example, they would have to determine at what point
cases are actually resolved when those cases have never been set
down on the trial list or have disappeared from the system.
Without that sort of information, we are dealing only with
snapshots at certain end points of a long process, i.e., the
number of proceedings commenced and the number of matters
disposed of but very little about what happens in between. It is
feared, that even those statistics are flawed.

Thirdly, we have found that statistics for even basic
information like the number of hours spent in court and the
number of cases commenced, vary somewhat depending upon the
source document being examined.

Fourthly, the assumptions made by the statisticians who decide
what to include and exclude as costs are not always visible to
the reader. For instance, it has been variously claimed that case
management is less expensive, and also more expensive, than
ordinary litigation. We suspect that such conclusions are almost
entirely dependent upon what costs are included in the
comparison.

Fifthly, many costs for which statistics are kept include both
criminal and civil components. No breakdown is available, and any
breakdown would require a great deal of work with original source
documents, as well as the incorporation of basic assumptions. For
instance, Statistics Canada announced in November 1994 that total
Canadian Government expenditures on justice rose an
inflation-adjusted 3.2% annually between 1988 and 1992, with
Legal Aid doubling in the same period. However, of the 3.2% of
which spending on justice represents of total government
expenditures, 60% is spent on policing, with Legal Aid totalling
only 6% for both criminal and civil litigation combined.

It is not that there is any absence of "numbers" in the
system. There are "numbers" everywhere. The problem is, as we
will discuss in the section of this Report dealing with
technology, that there is no consistent and dependable mechanism
yet in place for gathering accurate data to generate reliable
management information. The perils of such a situation are well
summed up by Will Rogers:

It ain't what you don't know that'll kill you;
It's what you know that ain't true.

We have placed some emphasis on the frailties and paucity of
the data available on the issue of the cost of justice for two
reasons. First, it serves to inject an element of caution
regarding our conclusions. Secondly, and perhaps of greater
importance, it underlines the need for further study to be
conducted on this question.

RECOMMENDATION

We therefore recommend that a research project be
commissioned to examine and analyze the question of the "cost" of
justice, both from an institutional or systemic perspective and
from the perspective of individual litigants.

The Review would have liked to have constructed a costing
model for the civil justice system, based on information
available, articulated assumptions and the results of a costs
survey which we conducted amongst lawyers. Unfortunately, because
of the difficulties referred to, we have not yet been able to do
so. Our efforts will continue, and we hope to be in a position to
say more about this question in our Final Report.

11.4 Preliminary Observations

Notwithstanding the foregoing caveats, our studies to date do
enable us to put forward some preliminary observations, and
snapshots about current institutional and individual costs of
civil justice in Ontario. They point to only the most obvious and
easily identifiable parts of the costs issue; however, we believe
that this examination of public expenditures is a beginning
towards the development of the sort of comprehensive cost model
which we hope can ultimately be constructed.

The taxpayer is involved with the civil justice system as both
"provider" and "user". We call the former "institutional" costs,
and the latter "individual" costs.

The Taxpayer as Provider

As provider, the taxpayer supplies government with the funds
to keep the civil justice system in operation. One way of
measuring this cost, then, is to examine how much money is
allocated to the civil justice system in the governmental
budgeting process, how those funds are apportioned, and how they
compare with total government expenditures. That will be one of
our tasks. We will also examine the revenues which are generated
by the justice system to give some indication of the "net" cost
of the system to the taxpayer as provider.

The same notion can be approached from other perspectives as
well. One way is to examine the cost to the taxpayer of providing
a trial to litigants, having regard to the facilities, personnel
and other infrastructure necessary to make that service available
to the public. While this snapshot does not by any means purport
to capture the entire picture of the cost of providing the civil
justice support structure, it does give some focus to the
institutional price of delivering the piece of the justice system
that is most visible to the public i.e., the trial.

Our snapshot image of this aspect of costs is still somewhat
fuzzy, because of the limitations on our data to date. We will
return to it in our Final Report. In the meantime, we will
venture some tentative observations.

The Taxpayer as User

As a user of the civil justice system, the taxpayer as
individual has to absorb the outlay of legal fees, administrative
fees, witness fees and other expenses relating to witnesses --
including the considerable cost of experts in the growing number
of cases where they play a role -- and other forms of
disbursements which must be incurred in the course of processing
litigation to its conclusion. These user costs are considerable,
sometimes insurmountable. They pose a significant problem in
respect of access and the affordability of civil justice. We are
able to make some tentative observations about them, based upon a
survey of the Bar conducted by the Civil Justice Review, in
combination with some other data which is available.

Institutional Costs: The Taxpayer as Provider
Government Expenditure on the Administration of Justice

In this context, the focus of our comments is
on the price of the administrative/judicial structure for
civil justice. The members of the Review recognize that there
are other expenditures which can be viewed, in the broad
sense, as a part of the cost of justice. They include policy
initiatives such as Legal Aid and the Family Support Plan,
police services and community programs, to name but a few.
Our purpose, however, is to focus the spotlight as far as
possible on the infrastructure costs necessary to provide and
sustain the machinery of civil justice -- facilities;
judicial and administrative personnel, the salaries, benefits
and support networks necessary for them to perform their
functions, and services, equipment and technology.

These are the elements of the "cost" of justice
which are more easily overlooked in the pressure of
government budgeting, because they are the aspects of the
system which receive the least public attention.

In 1993, the overall budget of the Ontario
Ministry of the Attorney General was $751,753,271. Of the
total Ministry budget, only about one-third is allocated to
the Courts Administration Division, which is the division of
the Ministry charged with the responsibility of running the
court system. This amount totalled $276,226,100 in 1993,
excluding funds attributed to administration of the Family
Support Plan.

Although the size of the Courts Administration
budget has been increasing in absolute terms over the years,
its relative share of the Ministry's budget has decreased
steadily from 50.71% in fiscal year 1986 to 37.1% in 1994.
Put in another context, the Courts Administration budget
represents a mere 0.54% of the total Ontario Government
budget for the year, a percentage which has remained
relatively constant for the past number of years [23] .

A breakdown of how the monies attributed to
Courts Administration are expended is illustrated in Table 1
on the next page.

The "judicial services" portion of this budget
includes remuneration of the judges of the Provincial
Division who, for the most part, hear criminal and family
matters. It does not include remuneration by the Federal
Government for the federally appointed judges of the General
Division, who hear both civil and criminal matters.

What all of this means, is that appoximately
$250 million (including Provincial Court judges' salaries) is
made available for the administrative infrastructure which
underpins the justice system in the province. The cost to the
taxpayer, in this sense, is roughly 1/2 of 1% of what it
costs the taxpayer for the government in its entirety.

Revenues Generated by the Civil Justice System

While the justice system cost the taxpayer
money, it also generates revenue at the same time through
fees collected, fines collected, and monies held in
trust.

In 1994, the revenues from the criminal and
civil justice systems totalled close to $397 million [24] . Excluding fines and
certain reimbursements received from the federal government,
provincial revenues still amounted to approximately $178
million. One could argue that much of the appoximately $250
million (including Provincial Court judges' salaries) which
is made available for the administrative infrastructure
underpinning the justice system in the province is
attributable to the criminal side of the system and that
total receipts from the justice system, including fines,
offer a fair measure when comparing costs and revenues.
Regardless, the comparison indicates that the civil justice
system is not a significant net user of public resources
overall.

Table 2 below, is a copy of the Statement of
Revenue for the Ministry of the Attorney General for the year
ended March 31, 1994:

Table 2
PUBLIC ACCOUNTS, 1993-94
MINISTRY OF THE ATTORNEY GENERAL
STATEMENT OF REVENUE
for the year ended March 31, 1994

1994 – $

1993 – $

GOVERNMENT OF CANADA

Reimbursements of Expenditures

Legal Aid:

>Criminal

34,644,834

33,184,834

>Civil

15,906,722

16,416,083

>The Young Offenders Act

6,976,738

5,753,351

Criminal Injuries Compensation Board

3,529,715

3,405,920

Native Court Workers

696,586

708,135

French Language Services

336,858

659,240

62,091,453

60,127,563

REIMBURSEMENTS OF
EXPENDITURES

Public Trustee

11,752,622

13,815,450

Accountant, Supreme Court of Ontario

2,314,791

621,654

Metropolitan Toronto
(Metropolitan Police Force Complaints Project)

511,320

553,750

Official Guardian

162,964

295,501

Family Support Plan
(Maintenance Payments from Deserting Parents)

42,225,372

28,260,480

56,967,069

43,546,835

FEES, LICENCES AND PERMITS

Local Registrars - Estates

60,854,668

51,729,522

Local Registrars - Other

38,084,934

41,012,088

Sheriffs

25,272,057

24,403,799

Provincial Courts (Civil Division)-clerks,
bailiffs

11,482,372

6,048,561

Unified Family Court

875,311

1,161,087

Assessment Review Board

2,045,167

0

Other

656,602

381,385

139,271,111

124,736,442

FINES AND PENALTIES

Provincial Courts

111,644,130

146,361,610

>Criminal Division

9,674

30,049

>Family Division

639,466

555,472

County and District Courts

486,903

473,026

Estreated bail

122,900

47,910

Unclaimed bail and restitutions

Supreme Court of Ontario

112,903,073

147,468,067

SALES AND RENTALS

Photocopies

249,016

228,392

Transcripts

4,043

8,313

Other

12,918

6,011

265,977

242,716

RECOVERY OF PRIOR YEARS'
EXPENDITURES

306,381

231,936

MISCELLANEOUS

Public Trustee - escheated estates

1,658,294

516,619

Outstanding cheques and unclaimed monies

1,000,808

313,921

Court Awarded Costs

530,569

131,412

Interest

202,073

118,189

Public Trustee - Investment Account

7,500,000

-

Other

1,908,780

1,022,163

Accountant - OC -suitors support account

12,000,000

0

24,800,524

2,102,304

TOTAL REVENUE

396,605,588

378,455,863

For policy reasons, revenues generated by the
system are not attributed to the system when decisions are
made about how monies are to be allocated. The revenues
earned do not go back into the justice system; they go into
the government's Consolidated Revenue Fund. It is neither our
mandate nor our purpose to debate the policy behind this
approach to budgeting. Obviously, there are ministries and
government services which are important to the public welfare
and which do not generate revenues. To base their funding on
a net accounting approach would not be fair.

At the same time, we believe it to be unfair to
ignore completely the revenue aspects of the justice system
in determining what its appropriate share of government
funding should be. The administrative infrastructure of
justice is not a significant net drain on the public purse.
Consideration might be given, it seems to us, to re-directing
some of those revenues, at least notionally, to modernizing
and retro-fitting the civil justice system for the rest of
the 20th and into the 21st century. At the very least, any
savings that may be attributable to the re-design and
re-organization of the system should be available to finance
the changes necessary to bring about that re-design and
re-organization.

What does it "Cost", Institutionally, for a Trial?

Attempts have been made to determine the cost
of a trial to the taxpayer. Such a statistic would be useful
because it would shed some light on the public price of
justice through the prism of what is the most visible part of
the system to the public -- a trial.

We have endeavoured to gather accurate data and
information about the total cost to the taxpayer of a civil
court action, taking into account not simply the time spent
by administrators and judges in performing the various
functions, but also the capital cost of owning and leasing
buildings and equipment, the cost of supplies and services,
and salaries. This has proved to be an enigmatic task. We are
continuing to work on it, and reserve our substantive
comments on it for our Final Report.

We note that a study has been done, in the
context of the case management pilot projects, which focuses
primarily on the "administrative costs for staff" of a case
proceeding to a three-day trial [25] . This study dealt with
such costs in terms of the time expended by administrators
and judges in the processing of nine different steps in a
lawsuit, ranging from the processing of the pleadings through
the pre-trial to trial. The administrative cost, in these
time terms, was estimated to be approximately
$2500-$2600.

There are other costs to the taxpayer which
must be included in arriving at a true picture of the cost of
the administrative and judicial infrastructure underlying a
trial, however. We have listed them above as facilities,
supplies, equipment, services, salaries. While the Ministry
has data available in the form of courtroom utilization
statistics and other costing, the data is not in a form which
makes it easily formulated as the "cost of a trial". What
data is available, not surprisingly, indicates that when such
costs are included in the cost of trial the figure is quite
substantially larger than the $2500-$2600 referred to above
-- perhaps as high as $20,000. The analysis lying behind
these initial indications is very limited, however, and
consequently we can only put forward this latter estimate in
a very tentative way.

There will be more about this aspect of the
cost of litigation in our Final Report.

Individual Costs: The Taxpayer (and other litigants) as
User

The Model of the Three-day Trial

What is the cost of the average three-day
trial to a litigant, individually? Having paid once for
using the system as a taxpayer, the litigant must pay an
additional time for the "private" costs of a lawsuit.
These individual expenses can be substantial.

Their major element is lawyers fees. The
following table illustrates the estimated costs of a
three-day trial in the Ontario Court of Justice (General
Division). They amount to over $38,000.

TABLE 3: COST OF THE TYPICAL CIVIL CASE TO LITIGANT
(assuming the plaintiff's side through a three
day
General Division Trial and a solicitor's time at
$200.00 per hour)

Steps:
Initial interview, information gathering and
research:

10 hours

Draft Statement of Claim:

5 hours

Prepare and Finalize Affidavit of Documents:

10 hours

Assume two motions (including prep):

15 hours

One cross-examination on Affidavits (one day plus
prep):

15 hours

Discovery (two days plus prep):

25 hours

Pre-Trial:

10 hours

Notices including Request to Admit:

5 hours

Trial Preparation:

30 hours

Trial Time:

30 hours

Miscellaneous letters, telephone calls, reports
(assume one hour per month over 3 years from start to
finish):

36 hours

TOTAL

191 hours

191 Hours at $200.00
Plus Disbursements
Plus G.S.T.

$38,200.00

"Plus disbursements" may appear to be an
innocuous addition to this list. It is not. Disbursements
can be very substantial. We have been advised, for
instance, that the disbursements in a simple uncontested
divorce proceeding usually exceed the amount of the legal
fees. In other instances, the cost of retaining experts
or preparing drawings or surveys -- to name but a few
examples -- can run into the many thousands of dollars.
In addition, the litigant must pay 7% G.S.T. on fees and
disbursements.

A Survey of Lawyers' Fees

The Civil Justice Review commissioned a
survey of the private Bar in an effort to gather more
substantive information about costs to litigants. 8,300
surveys were sent to civil litigation practitioners
around the Province. A response of 521 completed surveys
(6.3%) -- a statistically valid average -- was
received.

The demographics of the respondents were as
follows:

average year of call was 1981/82

practised in Toronto

(mostly Toronto) practised in firms of 51 lawyers
or more

devoted at least half of their pracitce to civil
litigation

These demographics appear to be
representative of the civil Bar in Ontario.

The average hourly rate was $195.00.

The responses indicated that the median of
the largest bill for judge and jury trials in the last
two years (only 16% responding) was $38,500.00. This
compares almost exactly to the estimate set out in the
Table above, which was prepared quite independently of
the survey. 85% of respondents said that less than 1/4 of
their bill was due to systemic delay.

Interestingly, most lawyers reported that
litigation was usually about matters relating to breaches
of contract (86%), rather than family law (71%) and small
claims court proceedings (68%).

Another interesting survey relating, at
least indirectly, to lawyers' fees was conducted for the
Simplified Rules Sub-Committee. It examined party and
party costs in a random sampling of 98 court files from
six different court centres in the Province [26] . This survey reveals
that the average claim in the General Division is
approximately $197,000; the average judgment is
approximately $58,000; the average allowance of party and
party costs, approximately $8,500. In terms of "medians",
as opposed to "averages", the median claim is
approximately $32,000; the median judgment is
approximately $15,000; the median award of party and
party costs is approximately $4,300.

Keeping in mind that the foregoing figures
represent only the costs awarded to one of the litigants,
and that those costs are only a portion of what that
litigant pays to counsel, the inference is strong that
the combined legal costs of the parties to a lawsuit are,
on average, about 3/4 of the judgment obtained; and on a
median basis, are perhaps more than the judgment
obtained.

Clearly, these costs to individual
litigants can be a barrier to access to justice. Many of
the recommendations which we have made elsewhere in this
Report will help to alleviate the pressures associated
with legal fees -- the caseflow management framework,
technology initiatives, reforms to the discovery and
motions processes and the various alternative dispute
resolution techniques, to name a few. In addition, we
believe, the profession needs to re-examine the way in
which it charges its clients for the services it renders.
Are there alternatives to the billable hour? Should
contingency fees -- one obvious form of alternative that
was urged upon us frequently during our consultation
phase -- be permitted as an option?

The billable hour has evolved as the
cornerstone of legal billing practise only over the past
15 to 20 years. Prior to that time the profession managed
to operate effectively on other bases, such as value
billing, block billing, or some other form of pre-set
billing or agreement for the billing of fees. Presumably
it is not impossible for these concepts to work again.
This does not mean, necessarily, that other forms of
billing will solve the issue of access or result in
significantly reduced legal costs. The real savings may
come from the streamlining of the system and the
implementation of a more efficient process.

Ironically, the concept of the billable
hour developed in response to a demand from clients that
lawyers "account" for their time, in order to justify the
amount that they charged. Now the billable hour is seen
in some quarters as a factor driving fees to
unaccountably high amounts. As we have mentioned earlier
in this Chapter, the public is skeptical that lawyers are
tempted to prolong proceedings such as examinations for
discovery in order to enhance their billable hours. At
the same time, the billable hour is an effective way of
monitoring the amount of time a lawyer is spending on a
file. In addition, it has become an important tool for
the internal management of legal businesses.

Contingency fees -- an arrangement where
the lawyer and the client agree in advance to share the
proceeds of the lawsuit, if any -- is a popularly offered
alternative to the billable hour. It is popular with the
public, which sees it in simplified "no win-no pay"
terms. It is popular with some members of the Bar, who
see it in an entrpreneurial way as an opportunity to earn
significant fees. It is seen, from both perspectives and
in other quarters as well, as a way of providing access
to civil justice for those who have meritorious cases but
cannot afford to litigate them and who are not eligible
for Legal Aid.

Ontario is the only province which does not
allow some form of contingency fee arrangement, except
for class proceedings. In 1988, the Law Society of Upper
Canada approved adoption of contingency fees in
principle, subject to certain safeguards for the public.
However, legislation is necessary to permit such an
arrangement between lawyers and clients and the necessary
amending legislation has not been enacted [27] .

We believe that it is time to re-visit the
concept of contingency fees as a possible means of
improving access to justice. There are, however, a number
of issues to be addressed, including:

whether matrimonial and criminal matters should be
excluded from the concept

the safeguards that need to be put in place for
clients, with respect to the reasonableness of the
fee;

whether there should be limits on the percentage or
recovery that may be agreed to as a fee.

We believe that all of these questions respecting alternatives
to the way in which clients are charged for legal services need
to be examined, in our view.

RECOMMENDATION:

We recommend that a working group be established,
in conjunction with the Law Society of Upper Canada, for the
purpose of addressing the issues involving legal fees and making
recommendations to the Civil Justice Review in that regard for
purposes of its Final Report.

11.5 "Court Costs" and the Imposition of
Sanctions

Courts have the inherent jurisdiction to award or refuse to
award costs, and to use the cost sanction to control their
process and to prevent abuse of that process [28] . This discretionary authority
is supplemented by the provisions of The Courts of Justice Act,
s. 131 and Rule 57 of The Rules of Civil Procedure.

There is a growing frustration amongst judges, lawyers and
members of the public at what is perceived to be the increasing
number of prolonged or unnecessary proceedings. Sometimes it is
the lawyer who is blamed, sometimes the client, sometimes Legal
Aid. The Review was urged on many occasions, by representatives
of all three of the foregoing groups, to recommend that Courts be
more vigilant in imposing costs as a sanction against conduct
leading to such proceedings.

In the Canadian system of civil justice, costs are generally
awarded to the successful party. Generally, as well, those costs
are ordered on the lower party and party scale that we have
referred to above, as partial indemnification to the successful
party for the expense of the litigation [29] .

On occasion, costs will be awarded to a party on what is known
as the "solicitor-client scale". Such costs should not be
confused with what a client must pay his or her own lawyer.
Solicitor-client costs are costs as between the parties to the
lawsuit, but they are costs at a higher scale, designed to
provide the recipient with "complete indemnification for all
costs (fees and disbursements) reasonably incurred in the course
of prosecuting or defending the action or proceeding, but ...
not, in the absence of a special order, to include the costs of
extra services judged not to be reasonably necessary" [30] . Costs are awarded on this
scale as an indication of the Court's disapproval of the conduct
of a party with respect to litigation, but are "reserved for
cases where the court wishes to show its disapproval of conduct
that is oppressive or contumelious" or, basically, where the
Court feels the successful party ought not to have been put to
any expense for costs in the circumstances [31] .

Thus, the imposition of solicitor-client costs against a party
is one method in which the court may exercise its discretion to
impose a sanction for unacceptable conduct in the pursuit of
litigation.

The award of costs for this purpose is not limited to an award
in favour of the successful party. Even where the party has been
successful, the Court may deny that party costs or even award
costs against a successful party, in exceptional circumstances.
Such circumstances might include situations involving misconduct
of a party, miscarriage in the procedure or oppressive and
vexatious conduct of proceedings [32] .

In addition, costs may be awarded against a solicitor or
counsel personally, where he or she has been responsible for an
abuse of process. This is a jurisdiction which Courts exercise
cautiously because it raises difficult questions about the duty
of lawyers to advance their clients' cases fearlessly and about
solicitor-client privilege (which might need to be pierced in
order to determine the reasons for counsel's conduct).
Nonetheless, courts have awarded costs against solicitors
personally in countless cases. It is a power which many have
urged on us should be utilized more.

The Supreme Court of Canada has recently revisited the
principles upon which this jurisdiction may be exercised. In
Young v. Young Madam McLachlin said [33] :

..The basic principle on which costs are awarded is as
compensation for the successful party, not in order to punish a
barrister. Any member of the legal profession might be subject
to a compensatory order for costs if it is shown that
repetitive and irrelevant material, and excessive motions and
applications, characterized the proceedings in which they were
involved, and that the lawyer acted in bad faith in encouraging
this abuse and delay. It is clear that the courts possess
jurisdiction to make such and award, often under statute and,
in any event, as part of their inherent jurisdiction to control
abuse of process and contempt of court.

... But the fault that might give rise to a costs award against
[the solicitor] does not characterize these proceedings,
despite their great length and acrimonious progress. Moreover,
courts must be extremely cautious in awarding costs personally
against a lawyer, given the duties upon a lawyer to guard
confidentiality of instructions and to bring forward with
courage even unpopular causes. A lawyer should not be placed in
a situation where his or her fear of an adverse order of costs
may conflict with these fundamental duties of his or her
calling.

It is apparent from all of the foregoing, then, that courts
are equipped with the necessary jurisdiction and authority to
impose cost sanctions, of varying degrees, on parties and their
lawyers in appropriate cases. There appears to be a growing sense
amongst the members of the public, the Bar and the judiciary that
these powers should be exercised more vigilantly in what seem to
be an increasing number of prolix, prolonged and unnecessary
proceedings.

We agree that trial judges should be alert to, and prepared to
utilize their authority in this respect -- always subject to the
cautionary caveats expressed above. We also urge members of the
profession to be alert to their obligations in this respect, and
to impress upon their clients the necessity of avoiding frivolous
and unnecessary proceedings. Society can no longer provide
unlimited time and resources for the disposition of lawsuits,
given the reality of fiscal and other constraints. What was once
thought of as everyone's "right to their day in court" may still
be a valid and important concept; it does not mean the right to
everybody else's day in court as well, however.

... The costs sanction is one of the only ways in which the
court can protect the integrity of its process in the
particular case, and act as a signal to other litigants of what
is required of those who wish to have the benefit of the use of
our courts to resolve disputes.

11.6 Forward Challenges

As this Chapter on Costs has illustrated, there are many
aspects to the "cost of justice" and much still to be done to
grapple with the challenges raised by the questions surrounding
them.

Some of the fundamental challenges facing the system in the
future include:

development of an accurate management information data base
to enable the various aspects of the "cost of justice" to be
analysed and improvements effected;

how savings, if they are found, can be redirected to
enhance the effectiveness of the civil justice system;

how the civil justice system should compete for and protect
its resources.

how Courts Administration can isolate and justify financial
requirements to preserve the system;

how access to the system on a timely and affordable basis
can be assured for those who do not qualify for Legal Aid;

It is the intention of the Civil Justice Review to continue to
pursue these questions and the numerous questions posed, but not
fully answered, in this First Report as part of our
implementation strategy. We will have further comment in our
Final Report.

[17] Moore, "Reflections of
Canadians on the Law and the Legal System: Legal Research
Institute Survey of Respondents in Montreal, Toronto and
Winnipeg," in Gibson & Baldwin, eds., Law in a Cynical
Society: Opinion and Law in the 1980's (1983).

[23] Ministry of the Attorney
General, Courts Administration Division, Program Development
Branch

[24] $396,605,588.00. See
Ontario Public Accounts, 1993-1994, Ministry of the Attorney
General, Statement of Revenue.

[25] Case Flow Management: An
Assessment of the Ontario Pilot Projects in the Ontario Court of
Justice, A Report to the Courts Administration Division of the
Ministry of the Attorney General, November 1993, Appendix E.

[26] Party and party costs are
not the costs that a client pays to a lawyer. They are costs
which are awarded by the court and which are payable by one party
to another. "Party and party" is a scale of costs which
represents, usually, somewhere between 40% and 50% of the amount
paid by a client to the lawyer. They are intended to be partial
indemnity only, and when not agreed to are "assessed" by
assessment officers connected with the Court.

[27] Section 28 of The
Solicitors Act R.S.O. 1990, chap. S.15, prohibits a lawyer from
purchasing any interest in litigation or making payment dependent
upon success.

[29] See M.M. Orkin, The Law of
Costs, 2nd ed. (Canada Law Book Inc.: Aurora, 1994), pp.
2-14.

[30] See the decision of Henry
J., in Apotex Inc. v. Egis Pharmaceuticals (1992), 4 O.R. (3d)
321, at pp. 324-328 for a general description of the principles
underlying the awarding and fixing of costs.